Fantasy and Reality

In the fantasy department, Governor Corzine's plan to allow local governments to defer half their pension payments for the next three years cleared the Senate Budget committee today. Committee Chairwoman Barbara "The Nanny" Buono said she has doubts about bill passing the full Senate. Let's hope it doesn't.

The Senate's chief bull spreader, Dick Codey said, "Many local governments are looking down the barrel of a loaded gun right now because revenues have declined so drastically."

Am I missing something here?

Local governments get their revenue from property taxes and from state funding. They are "looking down the barrel of a loaded gun" because the state has curtailed its funding dramatically. Property taxes are not subject to swings in the economy like sales taxes and income taxes are. Yes, the economy has an impact if property tax payers don't pay and subject their property to liens and tax sales, but those revenues don't ebb and flow with the economy like sales and income taxes do.

State revenue is raised by the sales and income taxes. You betcha those revenues are down. Corzine is fantasizing that the current year deficit will be only $1.2 billion.

So how does local government deferring pension payments create relief from a decline in sales and income tax revenue. Could it be that Corzine and Codey are planning to balance the current budget by withholding funding that local governments have already been promised? You betcha.

In the reality department, Essex County Executive Joseph DiVincenzo Jr. looked down the barrel of the loaded gun and pulled the trigger. He announced that 43 Essex County employees will be laid off as part of an initiative to eliminate 150 positions. Hell is starting to freeze over.

Corzine is in a Catch-22 situation. Even if he was inclined to layoff state employees, which he is not, the Unemployment Trust Fund is running out of money because the legislature has been breaking the trust for years and raiding the fund for current expenditures. If Corzine lays off state workers, he doesn't have the money to pay their unemployment benefits. That's one of the reasons Corzine went to Washington begging for a bailout like the auto manufacturers. Let's hope the U.S. Senate Republicans can prevent a bailout of State governments too.

As Jeremiah Wright would say, "The chickens are coming home to roost."